Implementing an overall healthcare strategy rather than ad-hoc perks can be beneficial for employers, says Sally Hamilton
Sickness absence can be expensive for employers. Last year, for example, the issue cost the UK economy £13.4 billion, according to the CBI/Axa Absence and labour turnover survey 2007.
Most employers know that the effective use of healthcare benefits can help to keep sickness absence in check and ease the pain. However, on closer examination, some may find that there is a degree of duplication of services across their perks, therefore, adding to costs. Employers can ensure that they maximise the effectiveness of their benefits by analysing what is available and putting in place a healthcare strategy that avoids any duplication.
Peter Mills, chief medical officer at Vielife, believes employers should start by being clear about the objectives for their heathcare strategy. "Is it just a tick-box exercise or is it part of the overall business strategy? Increasingly it is the latter. There's a greater appreciation in the boardroom that health does have a role to play, both in improving competitiveness, and in the recruitment and retention of talent. [A strategy] adds weight to what [management] intuitively knew before, that health has an effect on productivity and the bottom line," he says.
He adds that employers' main objectives behind a healthcare strategy are usually concerned with reducing absence, increasing competitiveness, improving productivity and creating an image of being an employer of choice. Ensuring that the healthcare benefits on offer are part of a cohesive strategy, rather than a random selection of perks, can help to demonstrate a tangible financial return. "In the past, it was more a leap of faith to offer these benefits but now increasingly there is evidence to support the financial case for healthcare benefits," says Mills.
Dudley Lusted, head of corporate healthcare development at Axa PPP Healthcare, adds: "The problem is a lot of healthcare benefits packages come together in piecemeal form. To be effective you first need to establish what you really want from healthcare benefits. You have got to ask, what's in it for you, the employer?" Lusted believes a typical strategy has three prongs. The first should be focused on benefits that are good for the employer such as absence recording systems, pre-employment health questionnaires, stress audits and employee assistance programmes (EAPs). "Since stress is increasingly a big cause of absence then the employer can put a strong emphasis on offering counselling through an EAP. Fast tracking employees into counselling offers a clear advantage for the business," he explains.
The second prong should be made up of benefits that are attractive to both parties, such as income protection cover or blood pressure testing, while the third should include perks that employees find valuable. "Annual screening or medical insurance that covers employees' dependants might be popular with staff but are not that useful or effective for the employer. Income protection until retirement is also a popular benefit with employees but why should an employer offer a plan that lasts until retirement when you cannot guarantee staff a job for life? You can benefit both sides by offering payment for two-to-five years, therefore reducing the employer's costs but still providing value to the employee," adds Lusted.
Putting a comprehensive healthcare strategy in place will not necessarily mean introducing a raft of new perks. Many employers inevitably end up with a mishmash of healthcare benefits over time but Lusted suggests these could be strategically reorganised instead of merely being topped up with new products. "Employers tend to look for new money when there is already a lot being spent on healthcare benefits."
Once these benefits are in place, it is essential to make sure they are used effectively. "One of the risks of offering benefits is that employees often forget they have them. So it's important to remind [them] what they have and what these benefits are worth in monetary terms," says Lusted.
One way of doing this is to build reminders into various systems such as absence management tools. When employees call in sick, for example, they can be directed to the relevant benefits to aid their recovery such as physiotherapy or counselling services.
Starting from scratch
Employers that wish to start constructing a strategy afresh, however, may start by offering an EAP and private medical insurance (PMI), says Mills. "PMI was traditionally offered because everyone else was doing it with little thought beyond that. There is a shift now to buying it but making sure it offers something extra that is more attractive for the employer, and not just the employee, such as a remote health management system," he says.
Mills believes that without such add-ons, offering PMI as a benefit can be a case of shutting the stable door after the horse has bolted. "There is now a shift to offering lower-cost preventative benefits such as EAPs and online health services," he adds.
An efficient absence reporting system can also be a key plank for the healthcare strategy. This can enable employers to take action more quickly to help ill staff return to work.
But when branching out into other products and services, employers need to communicate their strategy clearly to providers and give key personnel the responsibility to manage and communicate the benefits. "You need to be clear what you want in terms of provision. Put pressure on providers for value-added services. Also, consider putting a specific person or people in charge to coordinate between human resources and occupational health. Above all, make sure staff use the benefits," says Mills.
Some employers might find it simpler to procure all their healthcare benefits from one provider, and a number operating within the market now offer a range of products or have extended their provision.
Axa PPP Healthcare, for example has recently taken over Icas, a provider of employee support and wellbeing services, while Bupa has linked up with AIM-listed health specialist ADDleisure, which specialises in technology such as the Fitbug pedometer system to measure employee fitness.
Employers, however, need to make sure that they don't fall into the pitfall of choosing products with added services that then lead to them doubling up on certain benefits. This can become a particular issue if an organisation builds up a package in bits from a variety of suppliers. "Big organisations should have enough clout to ask providers for exactly what they want. Increasingly, the choices are menu driven. A trend in the US is for employers to demand that their different providers of healthcare benefits work together. They even ask for it to be in the contracts, [which] may become more common here," explains Mills.
Julian Ross, head of policy communication at Standard Life Healthcare, believes devising the right strategy will inevitably depend on cost. "Employers can start with an EAP for all staff perhaps and then add in benefits such as PMI for certain senior staff. Ultimately, you have to consider what you will get back from providing these benefits. [For example], an employer that has a problem with sickness absence might want to invest a bit more than one that doesn't. [Also], there's a growing body of evidence that if you put policies in place to get employees fitter, eat healthily and so on, that productivity improves," he says
Strategic Absence management†
The CBI/Axa Absence and labour turnover survey 2007 found that providing employees with early access to medical advice and treatment is closely linked to lower levels of absence. Employers that do provide early access have average absence levels of 6.29 days, compared with 7.74 days for those that don't. This is the same for employers which provide access to medical or surgical treatment as part of a rehabilitation policy.
Involvement from high-level managers as a part of the strategy can prevent absence from getting out of hand. The survey found that if senior or HR managers were responsible for absence management, absenteeism was lower. Yet, in 71% of organisations, line managers were in charge of the strategy.
Case Study: The Consensus Organisation
London-based building and construction industry recruitment company The Consensus Organisation put a healthcare strategy in place when the firm was launched six years ago.
Martin Tyrell, managing director, says private medical insurance from Standard Life is at the centre of its strategy and covers all employees. "Part of the reason for offering it is for attracting and retaining staff but, most importantly, it means if employees are sick or have an injury they don't have to wait for treatment. This is particularly relevant for those with sporting injuries who otherwise might have to wait months for NHS treatment.'
The product also includes an online health and wellbeing service, with email alerts going out regularly to employees offering advice on nutrition, sleeping and exercise. Staff can also assess their fitness through an online questionnaire. "We offer free fruit and smoothies and the majority [of staff] have taken advantage of part company-paid membership of the nearby gym and actually use it. We get very little absence through illness and if we do, it is rarely more than one day at a time," explains Tyrell.London-based building and construction industry recruitment company The Consensus Organisation put a healthcare strategy in place when the firm was launched six years ago.
Martin Tyrell, managing director, says private medical insurance from Standard Life is at the centre of its strategy and covers all employees. "Part of the reason for offering it is for attracting and retaining staff but, most importantly, it means if employees are sick or have an injury they don't have to wait for treatment. This is particularly relevant for those with sporting injuries who otherwise might have to wait months for NHS treatment.' The product also includes an online health and wellbeing service, with email alerts going out regularly to employees offering advice on nutrition, sleeping and exercise. Staff can also assess their fitness through an online questionnaire. "We offer free fruit and smoothies and the majority [of staff] have taken advantage of part company-paid membership of the nearby gym and actually use it. We get very little absence through illness and if we do, it is rarely more than one day at a time," explains Tyrell.